Jimmer Bollinger Band Entries Chat 051702
(thanks to Buffy
for hosting and transcribing)
[back to Jimmer]
transcript poor sound quality at beginning]
Stochastic: 7, 3, 3 and 21, 10, 4
MACD: 7, 28, 7
Bollinger Bands: 8, 1.8
EMA: 8, 21, 34
Ensign color bands: the lower band in the price panel is MACD cross
Price bar candles: colored with Dunnigan colors
Reference is to 3 charts posted under today's date.
I think I may have reached another stage in my evolution here. I'm real excited
about it and it I think it's worth talking about.
I'm going to type in 11 trades. Three of them
we'll talk about and the rest of them we'll just generalize about.
Trades - times are Pacific: 6:35Short, 6:46Long, 6:56Short, 7:00Long,
7:04Short, 7:10Short, 7:11Long, 7:19Short, 7:23Short, 7:27Long, 7:33 Short -
all taken on 77t - potential 69 points
Those are the times of the trades and whether they're long or short
All band related trades, all supported by something else in the higher time
frame, a condition of MACD in higher time frame
I use the 343Tick in the early going because of the speed of the market. And when I say 69 pts. I don't mean from top tick to bottom tick. That allows about a
point off the top and one off the bottom.
The main reason I changed and why I'm talking about Bollinger Bands so much is that
Bollinger Bands enable me to get into the trades sooner and with less risk and get out earlier or at a point where I have maximized the trade by using the bands. I can get into trades I couldn't get in before and have no more risk and get out at a point where I maximized the trades by using the bands.
The first one that I wanted to talk about was one which happened at 10:19 est. That was a touch on the upper band on the
77Tick. At the same time we also had a touch of the upper band on the 133Tick. At that time it was beginning to fall. We also had the touch of the band on the 210- and almost a touch on the
343Tick. The entry is as close as you can get to where that band is. You can't wait for it to take out the bar. I felt perfectly secure taking the trade and using a stop 1-1/2 ticks away. I would not take the trade unless the bands are not point up anywhere [i.e., I wouldn't get into a short trade with the bands heading up on any time frame.]
Next trade at 10:23 EST. Again, there was a poke through the upper band on the
77Tick, no touching the 133Tick but bands are heading down and the color bars show MA's
(moving averages) are crossed downward with the same situation on the 210Tick or the
Now, I don't want to pretend that I took all these trades and made 69 pts. I didn't. I'm a long way from where I need to be in terms of translating from observation to execution. The first 90 minutes move very fast. You can see how crammed together some of those trades are. They're only 3-4 minutes apart in some places and that takes some real discipline to do, but you see what you get. My goal has been to try to get 15 pts. an hr out of each day giving myself and hour and half slack time allowing myself time for breaks and family disruptions, etc. If just look at these tick charts and see how much movement there is, there's got to be a way to grab that much because there's really more. Using the bands I think is enhancing the ability to do that a lot. Using the bands the way I'm starting to use them now has increased the trading potential for me by 20 to 30%. [The average trade is 5 or 6 points.] When things are slow I get 2 or 3 points. Do not try to trade long against the band when it is pointing down. The main thing is if you're using the bands the proper way and trading with the bands and entering as close as you can get the risk is almost zilch.
Look at 10:33 EST - about one of the best of the day. What didn't it have going for it? There are other trades, too, slingshot, divergence., etc. If you use the bands for entry, you are entering early and getting more out of the trade, thereby buying you time and less risk. You have time to sit there and watch what happens without feeling threatened. If you study these things and look at the higher
time frame's, 210 and up, and see the bands touched [by price] when the bands headed down, you know you are safe to enter short at the upper band on the 77t.
A lot of these trades taken off the bands are divergence trades, etc. also. You get an earlier entry trading off the bands compared to when you'd be entering otherwise. You have time to sit there and watch what happens for a longer time and your risk is not higher at all. It just isn't. If you study these things and especially if you look at the higher
time frame and if you see when the bands are touched and not headed up or down you can't find a time when you get stopped out for 2 or 3 pts. It just doesn't happen or very rarely happens.
Don't let me forget about the epiphany regarding SMAX because I do want to touch on that, too.
Well, I talked about how rigid discipline has to be to trade like this in the early hour and a half. It gets easier. The opportunities don't go away; they pop up all the time. The action turns out to be the same usually. If it's not to your taste to trade like this all the time, it's okay, but it can add up to quite a lot. Some say if you are going to give yourself a 2 pt. stop, why bother to take a trade that might be only 2 pts. For 2-3 pt. trade, someone could say risk reward is 1-1 , but I think you have about a 4 out of 5 chance of being successful on the trade. Another reason is simple: there are a lot of them. So, the risk/reward isn't just 1 to 1, it's really more like 4 to 1 and there're simply a lot of them.
To SMAX for a second, one of the issues always was the rule we had that if you get a long
SMAX signal with the MACD and the price was within the upper 1/3rd of the
Bollinger Bands, you'd nix the trade because you didn't have enough room for it to go and the trade was not taken. And ultimately this rule would cause you to miss a number of good trades. And I think the bands have provided another way to do that [to get into the good trades we were missing].
I usually trade SMAX, if I'm trading SMAX, on the 133T. At 2:04 EST on the 133T, the MACD was about to cross upward, but price was right up against the
Bollinger Bands, so since price was at the top of the Bollinger Bands, the trade was a no-no. Then price goes under the rising
Bollinger Bands and that is your opportunity to grab it It is still a valid SMAX trade. [Wait until price touches the lower
Bollinger Bands and enter the trade there as long as the trade is still valid.] You see this kind of thing over and over.
That's about it. It's a multi-time frame thought process.
It's interesting. I got on this kick I guess 2 or 3 days ago and really I got excited. I thought it was too many things to see. I started concentrating and put my self in a mental frame of what am I looking for next. If I see a touch of the band on the 77, what do I look for next? You want to have a complete calm when you enter a trade. This is just different. It's also counter-intuitive to some degree. It's also very effective.
Whenever I talk about points I mean per contract.
(04:28 PM) dave_b_quick: thanks,
(04:28 PM) p_8: Bravo Jimmer, thanks
(04:29 PM) tkay_1: i don't want to sound like a party pooper but if some people have an impression
"im gonna go and make 50 points a day with this now" its prolly a wrong impression
(04:29 PM) tkay_1: that's what many people thought about smax
(04:29 PM) Buffy_04364: true
(04:29 PM) Buffy_04364:
Jimmer has worked hard to get there
Jimmer said "it isn't easy"
ADDENDUM TO ABOVE TRANSCRIPT PROVIDED BY Jimmer:
The technique of using the Bollinger Bands to enter trades is to enter when the band is touched in a lower time frame when the direction of the trade is supported by conditions observed in higher time frames. Those conditions would typically be the indications given by
MACD, stochastic, direction of moving averages, and the slope (up/down) of the Bollinger Bands
in the same and higher
The method of entry should be to enter as near as possible to the Bollinger Bands, preferably within a point, so that you will be able to set a stop just below the
Bollinger Bands and be risking no more than 1 1/2 or 2 points. I do not want to wait for the first up bar (long trade) to be taken out before entering. That will cause you to enter typically 2 points higher. The person who does that will usually need to place the stop at the same place as I do but it will be 2 points further from his entry point. So, if I risk 2, he is risking 4 or maybe more. If the trade works I make 2 points more and if it fails, I lose 2 points less. Since most NQ trades are 10 points or less, that extra 2 points makes for a very significant percentage increase in my results.
Having used the Bollinger Bands in this way for over a year, and through experimentation, I have found the 8 period
Bollinger Bands with 1.8 standard deviation to be the one that best fits the range and cyclicality of NQ and ES (less thoroughly studied). I have learned to trust that when the conditions noted above occur I can generally enter at the band with confidence that my risk is minimal and do not need any other type of "confirmation".
1. If price touches a rising lower Bollinger Bands (long) or a falling upper Bollinger Bands
(short) in the traded time frame, that is a safe entry point.
2. If price touches a lateral (flat) Bollinger Bands and is also touching (or nearly touching) a lateral
Bollinger Bands in a higher time frame, that is safe entry for trade in opposite direction.
3. If price touches lateral lower Bollinger Bands (for long) and lower Bollinger Bands
on higher time frame
is distinctly rising, that is a safe long entry (reverse for short).
4. If price touches lower Bollinger Bands and MACD and/or stochastic on higher time frame is showing long, that is safe long entry.